Spotlight
New normal fosters rapid retreat of Asia – Europe ocean rates
The Red Sea-driven spike in Asia – Europe ocean rates is in quick reversal as weekly services adjust to the diversions around southern Africa and the market ’ s underlying weak fundamentals begin to resurface . Spot rates peaked in mid-January with some indices recording Asia – North Europe levels of $ 5,700 per FEU and Asia – Mediterranean rates at close to $ 7,000 per FEU . Rates have fallen sharply since then , with Asia – Europe at $ 3,300 per FEU in mid-March , down 45 % since Jan . 12 , according to Platts , a sister company of the Journal of Commerce within S & P Global . Asia – Mediterranean routes have fallen 45 % to about $ 4,000 per FEU . Peter Sand , chief analyst at rate benchmarking platform Xeneta , told the TPM24 conference in Long Beach , Calif ., the costs of the longer route around southern Africa were being recovered by surcharges imposed by carriers on shippers , but even those additional charges were dropping . “[ Carriers ] are wasting money and burning more fuel going around Africa . At the moment , they are passing that cost on , but rates from the Far East to North Europe peaked in mid-January and we ’ re now in March ; it ’ s only coming down and going one way ,” he said . European importers were being forced to carry additional costs because of the additional seven to 10 days of transit time caused by the Africa diversions , said Antonios Rigalos , managing partner of beneficial cargo owner ( BCO ) network CrossStaff . “ Shippers have started to buy earlier to make sure their goods are on the shelves , so there has been a change in ordering and sourcing patterns that comes at a cost ,” Rigalos said during an Asia – Europe panel discussion at TPM24 . “ BCOs are prepared to pay for those costs at the moment , but we will need to split the costs with the carriers and not accept the all-in rates some carriers are asking for ,” he added . “ We want to separate the additional costs from the base rate .” However , there is consensus among analysts that as long as the Red Sea situation remains unresolved , rates will remain above the levels seen before the attacks began late last year .
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Downward slide for rates on India – Europe trade lanes
Container lines active on India – Europe trades seem to have little choice other than to adjust their pricing significantly downward to best utilize the loading space they have for fiscal year-end March sailings . Carrier rates for regular or contractual clients for loads from West India to Europe and the Mediterranean slid by double-digit percentages mid-March as trade flows settled into the new normal journey around southern Africa , according to data obtained by the Journal of Commerce from local freight forwarders . Average prices for a TEU booking from Nhava Sheva / Mundra to London Gateway or Rotterdam as of mid-March stood at $ 2,716 , down 23 % in just over a week . Relative FEU prices also dropped in the same range — down 20 % to $ 3,087 for London Gateway bookings and down 22 % to 2,987 for Rotterdam bookings , data shows . Rates to the West Mediterranean ( Genoa ) are hovering at $ 3,259 per TEU , a 20 % decline , and at $ 3,659 per FEU , down 10 %. Sunil Vaswani , executive director of the Container Shipping Lines Association ( India ), told the Journal of Commerce that a normalization of carrier schedules explains the recent softening in rates . “ The initial trade fears and hiccups in the aftermath of the Red Sea disruption have given way to steadiness in services due to the additional capacity deployments and reorganization of port calls by carriers ,” said Vaswani . “ Demand has been met with adequate supply .” But some forwarders have also reported large variances in carrier quotes for spot bookings on the late-March sailings . Sources put West India – North
Europe spot rates as of March 13 at $ 3,475 per TEU and $ 3,525 per FEU for Hapag-Lloyd ; $ 4,025 and $ 4,050 for CMA CGM ; and $ 2,698 and $ 2,987 for Maersk . For the West Mediterranean trade , relative prices were pegged at $ 3,821 per TEU and $ 3,792 per FEU for Hapag-Lloyd ; $ 4,066 and $ 4,091 for CMA CGM ; and $ 3,190 and $ 3,198 for Maersk .
Overland Saudi container transits gain traction
The prospect of trucking goods from the eastern coast of Saudi Arabia ’ s Dammam to the traditional trade hub of Jeddah on the Rea Sea looks increasingly more favorable amid soaring ocean spot rates and few signs that Red Sea security will be restored soon . The routing has revived hopes for the long-mooted Saudi “ Landbridge ” project , a proposed railway linking Jeddah to Dammam . A legacy railway now connects Dammam to the Saudi capital Riyadh , but none exists between Riyadh and Jeddah . In early March , the Middle East Economic
6 Journal of Commerce | March 25 , 2024 www . joc . com